4 Critical Questions To Ask Before Buying A House In 2022
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Are you considering taking the plunge into homeownership? There are several factors in deciding whether right now is the best time for you to buy a house. Here are four critical questions you should ask before buying a house in 2022.
Is Now A Good Time To Buy A House?
The current real estate market in nearly all across the United States is favoring sellers at this moment. In the week ending on Nov. 28, 2021, the available inventory of homes for sale hit an all-time low, according to Redfin. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported an 18.8% annual gain in November and 19.0% in October.
“The December national median listing price for active listings was $375,000, up 10.0% compared to last year and up 25.0% compared to 2019,” Realtor.com reported. Homes sold in 54 days on average – which is 11 days quicker than in 2020.
Most real estate metrics overwhelmingly favored sellers in 2021, but most of those barometers are showing signs of cooling in 2022 in most U.S. markets.
While buyers enjoyed record-low interest rates in 2021, that almost certainly will not continue. In an effort to combat surging inflation, the Federal Reserve warned that it will soon increase interest rates.
“With inflation well above 2% and a strong labor market, the Committee expects it would soon be appropriate to raise its key interest rate,” the Fed said, hinting that the increase could arrive as early as March.
You’ll need to answer questions about your personal finances and life goals to determine if you are ready to buy a home in 2022. Buying a home means putting roots down, which may not be compatible with your current relationship advice, your lifestyle, job requirements, or life goals.
You’ll also want to make sure that your personal credit score is up to par. A poor credit rating means that you’ll be stuck with higher interest costs on your mortgage.
Another factor is your debt-to-income ratio – which lenders utilize to determine how much mortgage debt you can take on while still paying off your prior financial obligations.
Can You Afford To Buy A New Home?
Purchasing a home will limit your flexibility – not only with your living situation but also with your available money.
It is a prudent decision to put down 20% or more on your home to avoid having to pay private mortgage insurance. So for instance, if the price of your targeted home is $400,000, you’ll want to put at least $80,000 down.
Don’t forget that you’ll need enough money to pay for the closing costs – which can range from 3% to 6% of your home’s purchase price.
You’ll also need money to pay for moving costs.
Can You Afford To Maintain A Home?
Once you buy a home, you’re not done spending money. You’ll be responsible to pay property taxes, unexpected repairs, new appliances if they break, basic maintenance, homeowners insurance, flood insurance in some cases, and homeowners association fees if applicable.
A wise decision would be to make sure that you can fund and maintain an emergency fund so that you are prepared for any surprise expenses.
[Image via Jp Valery on Unsplash]